Bad news can send stocks sharply lower, and that initial down move based on the news is often just the first step in a steeper decline. But unless the company is destined for bankruptcy, the stock will eventually stop falling and turn up. That’s the idea behind bottom fishing. There are some trading strategies that can be used to spot when the selling has gone too far and an upward bounce should be expected. But keep in mind that bottom fishing should… Read More
Bad news can send stocks sharply lower, and that initial down move based on the news is often just the first step in a steeper decline. But unless the company is destined for bankruptcy, the stock will eventually stop falling and turn up. That’s the idea behind bottom fishing. There are some trading strategies that can be used to spot when the selling has gone too far and an upward bounce should be expected. But keep in mind that bottom fishing should only be done in a bull market when stocks have a stronger tendency to rise.#-ad_banner-# The first step is to identify when the selling may have peaked. In a downtrend, it is very common to see the selling pressure accelerate. As prices fall, more and more traders want to sell and the result is a fast down move. When the selling stops, we often see prices bounce higher, and this is a good time to buy if we can find rules that define this pattern. To find… Read More